The demand for fixed rate home loans has dropped to its lowest level in almost two years amid growing speculation that the official cash rate could be cut further this year.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for just 20.55% of all loans written in January. Jessica Darnbrough, spokesperson for Mortgage Choice said the last time fixed rates accounted for less than 21% of all loans written was back in February 2013.
“Of course, given that many analysts are now predicting that the Reserve Bank of Australia will cut the cash rate in the not-too-distant future, it is unsurprising to see demand for fixed rate home loans decreasing and an increasing number of borrowers opting for a variable rate home loan,” she said.
Ongoing discount loans are the most popular variable rate product type, the data revealed, with this home loan accounting for 44.36% of all loans written.
Across the country, variable rates were most popular in Victoria, with this type of home loan accounting for 84.78% of all loans written. Western Australia and South Australia were not far behind, with variable rates accounting for 81.96% and 80.92% respectively.
Demand for variable rates was the lowest in New South Wales, with this type of product accounting for 76.38% of all loans written within the state last month.
The latest monthly Reserve Bank survey
compiled by finder.com.au found that 93% of economists and analysts surveyed expect the cash rate to remain steady at 2.5% this afternoon. However, 60% are expecting the central bank to announce a cash rate change this year.